Spain: The Ultimate Doomsday Presentation

Since we have grown tired of variations on the theme of "The Pain in ...." (having been guilty of encouraging it ourselves), we will spare readers this triteness, and instead summarize the attached must read slidedeck from Carmel Asset Management as the ultimate Spanish doomsday presentation. Naive and/or idealistic Spanish readers are advised to resume sticking their heads in the sand, and to stay as far away as possible from the attached 54 pages, which prove without any doubt why not only was Greece the appetizer (have your UK law:non-UK Law divergence trade on yet?) but why things in Europe are about to get far, far worse, as the Hurricane shifts to its next preferred location, somewhere above and just south of the Pyrenees.

In summary, here are Carmel's five reasons why Spain's problems are worse than the market anticipates:

1. Spain’s national debt is 50% greater than the headline numbers

Spain’s debt-to-GDP balloons from 60% to 90% of GDP with regional and other debts

2. Spain’s housing prices will fall by an additional 35%

Spain built one house for every additional person added to the population during the past two decades; the fall will decrease GDP by ~2% each of the next two years

3. Spain has “zombie” banks with massive loans to developers and to homeowners

Banks have not begun to realize losses and are vastly undercapitalized

4. Spain’s economy has not stabilized and will continue to deteriorate

Spain has the highest unemployment in the developed world, one of the highest overall debt loads, and the most uncompetitive labor market in Europe

5. The EU will not have the firepower or political will to bail out Spain

Rescue fund headline numbers are misleading and count capital that is not yet committed

And here are the problems that will manifest themselves over the next 12 months:

The Spanish banks who lend on real estate are also responsible for the valuations. In order not to crash the property market, these banks do not foreclose on delinquent mortgages but count the unpaid interest as new loans, disguising the perilious state of their balance sheets.

Since 2008, no big Spanish bank has failed and those that have failed have been ting and nationalised.

Spanish Banks and the Spanish government are worse than bust, they are fraudulently reporting how sound their financial system is; just look at the CDS rates

The banksters have already assigned Spain's new government. Here's how one French politician views the situation: "In a speech that played to populist fears about immigration, unemployment and the power of financial markets, Le Pen painted Goldman Sachs as an all-powerful institution that controlled entire nations as well as the European Central Bank." "Goldman Sachs topples governments everywhere," she told supporters in Lyon, southeast France."Goldman Sachs places its men at the top of euro zone countries. Goldman Sachs puts its man at the head of the European Central Bank," she went on. "In Greece, Italy, the ECB, oligarchs have taken power."

To compare apples-to-apples with the US, we can add ~$4.2 trillion in US State debt to our ~15.6 trillion federal bonanza = $19.8 Trillion.

Then take the projected 2012 GDP at ~$13.3 Trillion, and our apples to apples comparison yields Debt to GDP at 149%. (Not including LOCAL taxes, or the approximate $2.2 Trillion of unfunded pension liabilities by the states)...

If you then subtract the annual Federal Deficit of $1.1 trillion from GDP, here's what we get (assumption: Fed spending is included in GDP, so deficit spending gooses GDP by that amount)...

GDP 13.3 - 1.1T = $12.2 Trillion

Debt $15.6t + $4.2t + 2.2t = $22t

Debt to GDP: $22t/$12.2t = 180% debt to GDP. (give or take 10% or a trillion). It's a fricking disaster.

Again, add: LOCAL debt, unfunded Federal liabilities, and PRESTO: We're worse than SPAIN and right on the heels of Japan. So why so worried about Spain?

and the most glorious pink Elephant no self-denying Anglophile will ever talk about:

London the " financial Centre of Europe " the last bastille of the british failing Empire, and the United Kingdom is in Recession as we speak -

Yes, England (the not so United Queendom) is by far the worst of all indebted soverein Nations of Europe.

UK national Debt is about 10 trillion USD as we speak ! the UK has the highestgross foreign debt of any European country (€7.3 trillion; €117,580 per person) due in large part to its highly leveraged financial industry, which is closely connected with both the United States and the eurozone.

UK is back in recession, says OECD

(By Emma Rowley 6:30PM BST 29 Mar 2012)

Britain has plunged back into a recession, as the economy continued to shrink in the first three months of the year, according to a leading global authority. After the 0.3pc contraction seen at the end of 2011, this would signal that the UK has "double-dipped" back into Recession, defined as two quarters of negative growth.

The Bank of England should embark on more quantitative easing – its money-printing programme which currently stands at £325bn - "sooner rather than later",said Pier Carlo Padoan,chief economist at the Paris-based think-tank.

But he said the Chancellor must not relax his austerity programme, citing the low yields - interest rates - on UK government debt as a benefit. "Our recommendation is to stay the course," he said.

(10y UK Gov-Bonds yield currently 2.20%) "The UK will scrape out of this new Recession in the second quarter, the OECD believes, with 0.1pc growth".

excellent visual explanation of the euro crisis. if you are having trouble understanding what is happening in the western world financial crisis these guys have a simple, straight forward explanation. all we are waiting for is the "oh no!" moment.